Posted on 02/25/2011 4:22:47 PM PST by RetiredArmy
This week the media’s attention is finally focused on oil prices. After two years of continually rising consumer gas prices in America, the oil futures market has captivated the Mideast storyline. And attention is much needed. December 2010 saw the highest gas prices for the month of December in our nation’s history. This month, we’re setting similar records with the national average of $3.14/gallon [1]–fifty cents higher than it was a year ago. If this trend continues, the summer of 2011 will hit consumers much harder than in the summer of 2008 when prices soared above $4/gallon.
But if you only read, hear or see this week’s news reports, you would think that oil and gas prices were doing just fine until the historic events in Egypt, Libya and across the Middle East unfolded this past month and caused spikes in the futures market. Unfortunately, that is not the case. President Obama has been unilaterally taking steps to increase the cost of gasoline for two years. Here are ten things you need to know about gas prices that you may not hear reported elsewhere:
1. Gas Prices Are Skyrocketing Under President Obama: The oil futures market is just that, a futures market. The price-per-barrel spikes in oil this week have not affected the domestic market yet. In fact, former Shell Oil President John Hofmeister made the prediction in December 2010 that America would face $5/gallon gasoline by 2012 [2], a full month before the revolution in Egypt began. At the end of President George W. Bush’s two terms in office, prices were 9% lower [3] than when he took office (adjusted for inflation). The day before President Obama was inaugurated; the average price of a gallon of gas was $1.83 [4]. Today, that average is $3.14 [4].
2. President Obama Has Crippled Domestic Oil Exploration: Putting aside calls from some who want to increase domestic exploration to areas in Alaska and elsewhere, President Obama has completely shut down the existing oil drilling infrastructure in the U.S. At least 103 permits are awaiting review [5] by the Bureau of Ocean Energy Management, Regulation and Enforcement. The federal government has not approved a single new exploratory drilling plan in the Gulf of Mexico since Obama “lifted” his deepwater drilling moratorium in October 2010. Obama also reversed an earlier decision by his administration to open access to coastal waters for exploration, instead placing a seven-year ban on drilling [6] in the Atlantic and Pacific Coasts and Eastern Gulf of Mexico as part of the government’s 2012-2017 Outer Continental Shelf Program.
3. The Obama Permitorium is Costing the Government Much-Needed Revenue: The Gulf accounts for more than 25 percent of domestic oil production. With production in the Gulf expected to drop in 2011 by 220,000 barrels per day, the Energy Information Administration (EIA) estimates the U.S. will suffer $3.7 million in lost revenue per day [5] as a result of lost royalties. If that holds, the federal government would lose more than $1.35 billion [7] from royalty payments, just this year.
4. The Obama Administration Has Been Held in Contempt of Court: Federal District Court Judge Martin Feldman held the Obama Interior Department in contempt of court [8] on February 2, 2011, for dismissively ignoring his ruling to cease the drilling moratorium which the judge had previously struck down as “arbitrary and capricious.” Judge Feldman has since given the Administration 30 days to act on permits [9] it has needlessly and purposefully delayed saying inaction was “not a lawful option.”
5. Jobs Are Being Killed by Obama’s Oil Policies: As a direct result of Obama’s oil policies, companies that help supply our domestic energy needs are going out of business [9]. Most recently, Houston-based Seahawk Drilling filed for bankruptcy. The Chief Operating Officer of the offshore drilling company, Randy Stilley, stated: “The decision by regulators to arbitrarily construct unnecessary barriers to obtaining permits they had traditionally authorized has had an adverse impact not only on Seahawk, but on the sector as a whole.”
6. And More Jobs Are Being Killed: Vendors, suppliers, even restaurants and retailers are losing ground or going out of business as a result of the economically crippling policies Obama has unilaterally imposed. According to Reuters, many of the thirty-plus deepwater rigs in the Gulf have moved to other markets [10]. Each rig directly employs approximately 200 people, but that doesn’t even count the ripple effect across the nation. One industry official told CNBC that the industry was on “life support [11].” But President Obama is spending billions to finance offshore jobs…in Brazil [12]. The Obama Administration committed at least $2 billion in 2009 towards Petrobras, one of the largest offshore oil drilling companies in the world.
7. Decreasing Our Domestic Supply Increases Foreign Dependence: Even Energy Secretary Steven Chu admits [13] that “any disruption in the Middle East means a partial disruption in the oil we import. It’s a world market and [a disruption] could actually have real harm of the price.” If this is the case, then cutting our domestic supply hardly seems like an appropriate response. Rather than face this reality, Secretary Chu ridiculously called for an increase in renewable energy investments, which is a complete non-sequitur.
8. Renewable Energy Is Not the Answer to Mideast Turmoil: According to the EIA, petroleum accounts for less than one percent of electricity production. So wind and solar, which do not produce transportation fuel even if Obama’s $40,000 Chevy Volt quadruples production, can only replace coal and natural gas, of which America has an abundant supply. As for biomass, over 40 percent of domestic corn consumption goes to ethanol, which provides less than 10 percent of our transportation fuel and causes food prices to increase. Three large production platforms in the Gulf could provide an amount equivalent to all of the biofuels produced in the U.S.
9. Regulations and Delays: The Obama EPA has added costly new regulations [3] to refineries in the name of global warming, while the Obama Interior Department issues new rules [3] that make it much harder to develop natural resources on government land. The EPA is also denying approval [14] of the Keystone pipeline which would increase the amount of oil the U.S. receives from our friendly neighbor Canada by over a million barrels per day.
10. The Middle East Is Not the Sole Cause of Rising Oil Prices: Global oil prices have been rising steadily for months based on variety of factors including those listed above and as the world economy pulls out of a recession. In fact, Egypt is not a major producer of petroleum, and only 2-3 percent of the world’s supply moves through the Suez Canal. Certain spikes are not abnormal and can be more easily weathered with a smarter domestic energy strategy.
This week, Deputy Energy Secretary Daniel Poneman told Bloomberg Television [15]: “We’re hoping capacity will be brought to bear so it will continue to support our economic recovery.” Mr. Poneman needs to head down his hallway to meet with his boss Secretary Chu and explain how energy prices affect an economic recovery. Because it was Chu who, in the name of environmental radicalism, stated in 2008: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe [16].” It would seem President Obama and Secretary Chu are getting their wish and you are paying for it every day.
You can follow Rory Cooper on Twitter @rorycooper [17]
He’s helping his Muslim brothers at the same time as he’s destroying the US. Keep stirring the pot and see what happens.
Here’s the biggest point of all: Obama’s refusal of offshore and domestic drilling is helping significantly in driving up gas prices. The end.
While Obama’s green energy is being subsidized, he refuses to allow open drilling for oil and natural gas on and off US shores.
If the price of oil keeps going up as I expect it will, Obama might as well forget about any re-election chances in 2012.
“Here’s the biggest point of all: Obama’s refusal of offshore and domestic drilling is helping significantly in driving up gas prices.”
Because he and his puppet masters WANT to destroy this country through economics and remake it under a new world order.
Now period!
Glad you posted this.
I am no friend of 0bama at all. But I do not think it is fair to blame 30 years of brain-dead, leaderless inactivity on *ANY* of the fronts of 1: Thorium power reactor research 2: “regular” nuclear reactor construction 3: natural gas “deployment” into the economy. Obviously.
That the US has not developed energy independence over the past 30-35 years is traitoriously negligent. That’s as simple as I can state it.
Paging Nancy and Harry!
U R WELCOME.
I am amazed here on FR the number of posts lately, particularly on the energy and Middle East issues, that have started out like yours. Not sure why here, of all places, Obama would have so many defenders and apologists.
Oil prices in this country have skyrocketed under this administration and that’s the simple fact.
So Obama is out to destroy the US? Who knew? /s
Add to all this rising costs of production brought about by excessive, feel good, no improvement in operations and safety over regulation.
Add the gang of lawyers writing senseless contracts that only increase costs by trying to shed liability to the vendor who has no stake in an oil well.
All the lawyers in our industry are bent on trying to legally fix and indemnify against stupid, incompetent and negligent events.
These artificial restrictions and additions will ultimately require costs to increase and the number of people to deal with the changes to grow. Trained and experienced people we don’t have will only make things worse. This is a wasteful state of affairs.
I am not only no friend of dumbo I absolutely loathe him.
However, the United States has behaved stupidly in energy policy. You mention three excellent opportunities to have reversed that trend.
Instead we simply keep doing the same things hoping for a different outcome. Insanity!!!
A hydrogen based transportation fuel is another supplement that seems reasonable if we can make electricity cheaply by means you mention.
Coal to diesel is another alternative. Gasoline is a poor transportation fuel. We should be using nothing but diesel and making all efforts to improve ways to convert as much crude to diesel as possible. Inventories of multiple base transportation fuels is foolish and unwieldy. Better to grind the whole cow into hamburger, so-to-speak.
We will never do anything right and never do anything at all until it is too late.
Politics is nothing but management by spoils and crisis.
Well, you summarize what I was trying to say. Looking back over the past few decades, the US has acted impetuously, like a 20-year old who has no concept that there will come a day when he/she will likely have to rely upon “banked” resources taken out of the arena of current consumption and saved for “later”. Obviously, money saved for retirement is the most blatant example.
But it is interesting in a tragicomic way why we are in some of these particular quandaries. It is interesting how history has played out in terms of “forks in the road”.
For example, the way the entire nuclear industry was brought to its’ knees for 25+ years by Three Mile Island, an accident that killed nobody but scared the daylights out of us. Had TMI never happened, wouldn’t we have easily 25-40 more nuke reactors?
Even before that, the choice whether to utilize Uranium-Plutonium in nuclear projects vs Thorium (which makes massively more sense in all but one or two ways) except that Thorium is a completely defective means of achieving a weapon; But we needed and felt compelled to build a weapon because of our perception that our enemy was developing same. Which was both true and a reasonable supposition/fear. Of course, there is an argument that there was no commercial motivation to go after either one and the only way nuclear was developed when and how it was was because the gov’t decided to drop everything and devote essentially unlimited resources to the production of an N-weapon.
Why we shut down most of our domestic oil production when/because mideast oil was so cheap and plentiful. As recently as 1999-2001, oil was $10-$18 a barrel.
But the inescapable conclusion, to me, is that we grossly, grossly failed to learn the lesson taught us by the oil shock of 1973. Inexcusable. We must have thought we were invulnerable. We had oil go from $2-3 a barrel to $40 a barrel (which blows the living daylights out this current 10-15% spike on a pctage basis, of course) and we did nothing, even after seeing the damage it did to the economy and indeed, the entire spirit of the country. Or maybe we learned the WRONG lesson: Instead of resolving NEVER to be in that oil-price-blackmail position no matter what; I guess we just figured that we were so big, so invulnerable, that we could handle even a 10X price rise in oil.
And look how we are screaming now over a 10-15% price rise.
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